EconomicCrisis.US

In 2008 and 2009, Washington strove to save the economy. In 2010, Americans will get a clearer picture of how Washington has changed the economy.

Only as the recession recedes will it become fully evident how permanently the state’s role has expanded and whether, as a consequence, a new, hybrid strain of American capitalism is emerging.

One thing is clear: The government is a much bigger force in today’s U.S. economy than it was before the financial crisis. “The frontier between the state and market has shifted,” says Daniel Yergin, whose 1998 book “Commanding Heights” chronicled the ascent of free-market forces starting in the 1980s. “The realm of the state has been enlarged.”
[USA INC]
Previously in USA Inc.
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Has President Obama learned nothing from the collapse of Fannie Mae and Freddie Mac, the government-guaranteed mortgage giants? Has he learned nothing from the broader collapse of the housing market, caused in large part by the rotten mortgage securities that these two firms churned out and sold to investors over the last decade?

Instead of learning from those sorry spectacles, Obama has bought into his own false narrative about some imaginary deregulatory action causing the economic collapse of 2008. Hence his baffling decision, cleverly buried in the Christmas Eve news dump from the White House communications office, to remove the $400 billion cap on federal loan guarantees for Fannie and Freddie.
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Sales of existing U.S. homes in November rose to the highest level in almost three years as first-time buyers rushed to take advantage of a government tax credit and lower prices.

Purchases increased 7.4 percent to a 6.54 million annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. Another report showed the economy grew a less-than-forecast 2.2 percent in the third quarter as companies cut stockpiles, pointing to manufacturing gains at the start of 2010.
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In 2009, the economy was near collapse before pulling back from the brink of depression. Unemployment topped 10 percent, but layoffs eased. General Motors and Chrysler toppled into bankruptcy and emerged smaller and leaner. The Dow Jones industrial average swooned to a 12-year low, then came part of the way back.

It was a year of payback for having lived beyond our means — from Wall Street bankers who devoured risk they couldn’t manage to ordinary Americans living in homes they couldn’t afford with mortgages they didn’t understand.

It was a year of finger-pointing over blame for the worst recession since the Great Depression. Americans pondered how long it would take to mend shattered nest eggs, livelihoods, government balance sheets and economic confidence.
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